Small Business Alert: Fair Work Commission Ruling Highlights Critical Flexible Work Requirements

Any employee of a small business can make a request for flexible working arrangements after 12 months of employment.

A recent decision by the Fair Work Commission (FWC) Full Bench should put all Australian small businesses on alert regarding flexible work arrangements. The Commission overturned an employer's decision to refuse a part-time flexible work request solely because the business failed to follow one of the procedural requirements in the Fair Work Act 2009 (FW Act).

Despite findings that the employer had reasonable business grounds for the refusal, the Commission ordered the request be granted due to this procedural error. The Full Bench emphasised that the importance of providing a proper written response to flexible work requests "cannot be understated" - a warning particularly relevant to small businesses with limited HR resources.

The Case in Brief

A teacher at a small private school requested to return part-time for two terms in 2025 as she transitioned back from parental leave, to accommodate parenting responsibilities until childcare arrangements could be finalised.

The school refused the request citing concerns familiar to many small businesses: operational impacts, increased costs, additional workload on other staff, and reduced leadership capacity.

At first instance, the Commissioner found these were reasonable grounds for refusal - a finding not overturned on appeal.

The Critical Process Error

The school made two procedural mistakes. While responding after 82 days (instead of the required 21 days) did not invalidate their refusal, their failure to address in writing how the refusal would impact the employee proved fatal.

The Full Bench determined that by not addressing this impact in its written response, the employer had not properly considered how the refusal would affect the employee - a mandatory prerequisite for refusing a flexible work request under the FW Act.

As a result, the Commission ruled the employer "was not entitled to refuse the request" and ordered the part-time arrangement be granted - despite acknowledging there were reasonable business grounds for refusal.

Surprising Remedy with Serious Implications for Small Businesses

Rather than instructing the employer to reconsider with correct procedures, the Commission simply granted theemployee's request in full. This highlights the critical nature of getting the process right the firrst time, as small businesses may not get a second chance to correct procedural errors.

For small businesses where every staff member plays a crucial role and resources are limited, having the FWC mandate staffing arrangements against your operational needs could be particularly challenging.

Essential Lessons for Small Business Owners

To protect your business, ensure you meet all prerequisites before refusing any flexible work request:

Discuss the request directly with your employee
Genuinely try to reach a compromise that accommodates their circumstances
Carefully consider and document how a refusal would impact your employee
Identify reasonable business grounds for any refusal

Most importantly, ensure your written response to the employee clearly addresses all these points, demonstrating you've met your obligations under the FW Act.

For small businesses without dedicated HR departments, this case underscores the importance of understanding your procedural obligations, as technical errors can override otherwise sound business decisions.

For More Information

Small business owners can access the full decision at here and consider consulting with your membership association about developing compliant flexible work response templates.